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September 22, 2005

Herbalife: The Distribution of Distributors

I have taken a leisurely interest in Herbalife as of late, in particular the economics of Herbalife. I was considering writing a big old article about it, but it was very boring, and overwhelming technical. I figured I'd just share some of my findings once in a while.

I really want to approach Herbalife fairly, without the initial assumption that it is a scam. Can you really make money as a Herbalife distributor, and if so, how?

The first question I asked was: "Where are the distributors?" It's hard to make money with too much competition. The area where I live seems to be oddly devoid of Herbalife distributors. Where were they?

The answer isn't clear, but there are some possibly significant patterns. I wanted to find a list of Herbalife distributors, so I could see where they were located in my local area. Doing so wasn't so easy. Herbalife doesn't offer any such listing. If you want to find a distributor, they will pass on your information to one who will contact you at a later time. I can not see what possible benefit this could have for customers.

So I manually searched, and as Herbalife suggested, took a look at the Yellow Pages. And what I found was a bit puzzling. There were very few distributors in our affluent area. However, there was a concentration of distributors to the South, in the working-class areas of Auburn, Federal Way, and Tacoma.

I can think of four possible (non-exclusive) reasons for this concentration.

1) Richer people prefer not to sell Herbalife
2) Richer people prefer not to buy Herbalife
3) Poorer people prefer to sell Herbalife
4) Poorer people prefer to buy Herbalife

Let's make some assumptions.

Do richer people prefer not to sell Herbalife? Certainly they already have plenty of money. But they also seem like the perfect people to start distributing. They are more likely to have startup capital, as well as free time. Yet they are not selling. The answer to our question seems to be yes.

Do richer people prefer not to buy Herbalife? The high cost of Herbalife products is less likely to influence their purchasing decision. It may be that they have better (or more socially acceptable) options available to them. But perhaps richer people simply don't have access to Herbalife distributors. We can't really answer this question.

Do poorer people prefer to sell Herbalife? Poorer people would seem unlikely candidates to begin a small home business. They don't have a lot of extra cash for startup capital. But unlike richer people, they may be in greater need of the money. In the very least, poorer people are more likely to sell Herbalife than richer people. Let's answer this question yes as well.

Finally, do poorer people prefer to buy Herbalife? I find this proposition unlikely. Herbalife products can be very expensive. Logically, I think we can rule this out. Answer: No.

So, richer people may or may not prefer to purchase Herbalife products, but richer people are not selling in their area. Poorer people would not seem inclined to purchase Herbalife products, yet the same people are more likely to sell these same products.

The bad news is, if you're poorer, you are probably going to have trouble selling your products to your peers. And people who are richer than you aren't interested in investing their time and money in Herbalife... they have probably found more profitable ways to invest their money.

The good news is, we don't know if richer people want to buy Herbalife products. If you are living in a richer area, the opportunities for success are probably greater. The question is, how slim are they to begin with?

Do you disagree with me? Are my assumptions wrong? Are there reasons I'm leaving out? Good, then please leave your thoughts in the comments section.

Posted by March at September 22, 2005 06:48 PM

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Posted by: Tony at November 28, 2005 09:57 AM

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